Short ALGN on B-Wave rally
I posted a short setup on ALGN back in June of 2018. The stock had just broken out a Wave 4 triangle and was grinding higher in Wave 5. I took a short position on a trendline break at $340, which in hindsight was an early entry. I held the position for months as the stock chopped sideways to higher, but was finally rewarded when ALGN gapped lower to $230 in October. I covered my short on the initial spike and put ALGN back on my long-term watchlist, assuming that I would get another opportunity to short following a corrective rally.
It is now 5 months later and I believe ALGN is setting up for its next wave lower. The initial sell-off from the high found support around $175 before turning higher. Because the prior sequence into $400 was an impulsive five wave move, I expect a subsequent three wave correction. Look for Fibonacci levels off the high to act as resistance in coming weeks. Also note that the price gap formed back in October will be fully retraced at $290. Initiating a short position at market and looking for a push back to and through $180. I will look to scale into additional shorts on rallies up to $315 and would only change my outlook on a clean break above $350.
It is now 5 months later and I believe ALGN is setting up for its next wave lower. The initial sell-off from the high found support around $175 before turning higher. Because the prior sequence into $400 was an impulsive five wave move, I expect a subsequent three wave correction. Look for Fibonacci levels off the high to act as resistance in coming weeks. Also note that the price gap formed back in October will be fully retraced at $290. Initiating a short position at market and looking for a push back to and through $180. I will look to scale into additional shorts on rallies up to $315 and would only change my outlook on a clean break above $350.
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